I have been a CPA for over 30 years focusing on taxation. I have extensive experience with partnerships, real estate and high net worth individuals.
My ideology can be summarized at least metaphorically by this quote:
"I have a total irreverence for anything connected with society except that which makes the roads safer, the beer stronger, the food cheaper and the old men and old women warmer in the winter and happier in the summer." - Brendan Behan
Nobody I work for has any responsibility for what goes into this blog and you should make no inference that they approve of it or even have read it.

Some People Can't Resist The Siren Call Of Tax Season

Gearing up for another tax season. It’s just not the same anymore. I remember we would get our new Master Tax Guides and dividend guides. It was kind of like that feeling you had as a kid when summer was ending and you were getting new notebooks and protractors. You knew that after a week or so you would be looking forward to vacation but for that brief period you were looking forward to school. We used to have a meeting that would start out with Herb Cohan rapidly reading everything he had heard at the NYU Tax Seminar. He would always finish up by telling us that we were the best crew that he had ever had. All those years of continuous improvement. I hate to think what it must have been like at Joseph B Cohan and Associates in 1956, if we were like thirty years better than they were.

The funny thing about tax season is that most people involved in it and their families say that they hate it. It’s not true. Well maybe with the families, it’s true, but a lot of preparers really love tax season, although they don’t admit it – even to themselves. It gives life drama and creates a certain level of camaraderie. I still remember the way some of us would become part time smokers bumming cigarettes from the few full time smokers left. I would buy my source a pack every week or so. My buddy Mikey and I would always break for supper, usually chili dogs, and drop a few quarters playing Spy Hunter in the Dream Machine. Around 9:00 PM, after all the partners were gone I would go to the deli and buy a six pack and give a can to each of the hard core guys that worked till 10:30 every night. And of course as you were leaving the office at 4:00 PM on Sunday, you could always count on somebody telling you to have a nice weekend.

If you don’t believe me about some people loving tax season, just consider the case of DeWayne Preacely whose sentencing appeal was turned down by the Seventh Circuit. Mr. Preacely got nine months in prison and three months of supervised release just for hanging around the office of the tax preparation business called Personal Tax, that was owned by his wife. He said he wasn’t even preparing returns. But wait a second ? Is hanging around at a tax practice a crime ? Well for most people it is not, but Mr. Preacely’s circumstances were special.

Rovner, Circuit Judge: DeWayne Preacely pleaded guilty in 2009 to one count of tax fraud in violation of 26 U.S.C. §7206(2). The district court sentenced him to 18 months’ imprisonment to be followed by a threeyear term of supervised release. After his release from prison, the district court revoked Preacely’s supervised release when the court concluded that he had violated a special condition of his supervised release prohibiting him from participating in his former occupation of tax preparer. Preacely appeals from the district court’s decision to sentence him to a nine-month term of re-imprisonment followed by an additional three months of supervised release

Preacely’s underlying conviction stemmed from his involvement in procuring fraudulent tax refunds for clients of his business, Personal Tax. Preacely’s clients received illegitimate refunds by including on their tax returns items such as nonexistent business losses and dependents. Thus, in addition to the standard conditions of supervised release, Preacely’s 2009 conviction contained the following special condition of supervised release: “Defendant is not to act directly or indirectly as a tax preparer during the term of supervised release except for his own family.” When the district court imposed the special condition of supervised release, Preacely’s counsel asked the following question by way of clarification: “Judge, may he own the business if he himself does not prepare any taxes himself?” The court responded, “No. No. I think he has compromised his integrity with a significant number of fraudulent tax returns, and you should not engage in the business of tax preparation directly or indirectly.”

Apparently even after Mr. Preacely’s stay in federal housing, there were still issues with Personal Tax.

Meanwhile, the IRS had initiated another investigation of Personal Tax after discovering that in 2011, 99.5% of the 1,762 tax returns filed by Personal Tax claimed refunds—of which over half were claims of self-employment income for alleged in-home childcare providers or beauticians. During its investigation, the IRS sent an undercover agent to Personal Tax; when the agent was there he inquired about a job and asked to speak to the vice-president. He was directed to Preacely, who told the undercover agent that if he had inquired earlier during the tax season Preacely would have hired him.

There you have it. The lure of tax season. Mr. Preacely had been in prison. They let him out and he knew that if went back to being involved with tax preparation, he could go back to prison. He couldn’t resist.

I will say this. I have never developed any affection for what we now call second tax season. It runs from early August through October 15th. That is when we complete what Robert Flach, The Wandering Tax Pro, calls the GDEs. The rest of us call them extensions. Bob’s resentment of them is that he wants to work about 168 hours a week for a couple of months and spend the rest of the year blogging and going to musicals. Even a tax preparer who admits to liking tax season is unlikely to like second tax season and certainly not as much as a hobbit likes second breakfast.

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Now that you mention it, I do seem to recall that the earned income tax credit gimmick became so lucrative that it would pay folks to create false business income in order to generate the earned income credit refund.

Ahh, sad but true.. so that’s why I’m reading your blog on a Saturday morning? I still dread the possiblility of a delayed or extended tax season if the IRS can’t get the forms ready. I’m guessing that you also still refer to the ’86 Tax Act as the “New Act” right?

No. The 1986 Act is what made my career. Everything that everybody knew and had done was now wrong, so the bookish and introverted who had spent time reading Treasury II had a temporary advantage. The guys who drove Merecedes, played golf, wore expensive suits and drank single malt scotch really needed us more than ever during that period. Hopefully we’ll get another major overhaul out of this mess and the industry can experience revenge of the tax nerds again.